LOS ANGELES — Von Dutch Originals, which rocketed to fashion fortune as it helped popularize trucker caps, settled a lawsuit on Wednesday with one of its founders, Robert Vaughn, who sought more than $1 million in damages after alleging fraud and unfair business practices.

Terms were not disclosed, and neither side admitted wrongdoing.

Vaughn filed the suit in Los Angeles Superior Court in June 2003 against Von Dutch owner Tonny Sorensen and a trial ensued. He accused him of unfair business practices, fraud, breach of fiduciary duty and breach of fair dealing. Vaughn settled with another Von Dutch co-founder, Michael Cassell, in July. Sorensen won full ownership of the company in February after binding arbitration of a dispute with Cassell.

Sorensen, who was cross-examined at the trial on Tuesday, now oversees a company that has grown to 10 stores, including locations in Rome and Mexico City that opened in the last month; wholesale accounts and licensing deals with kids’ apparel, and, most recently, shoes. Sales may be as high as $70 million annually this year, he said.

“Now I’m free and clear to run the business,” Sorensen said. “I’ll be the creative director and am assembling a team for the new spring and fall 2005 lines.”

In 1996, Vaughn and Cassell secured the licensing rights to use the trademark name of late custom-car artist Kenny Howard, who was known as Von Dutch. Three years later, they obtained a $475,000 loan from Japan-based Ueno Shokai Co. Ltd. and raised another $500,000 to form Von Dutch Originals. When sales faltered, the partners split. Vaughn left the company in 2000 after getting the exclusive license for his new firm, VD Kustoms, to manufacture all Von Dutch products except for denim. He alleged that when Sorensen bought a stake in the company that year, the license was terminated and a second license was created.

“Von Dutch Originals acknowledges Robert Vaughn as one of its founders who has made a valuable contribution to the company,” said Steven Lowe, one of Vaughn’s lawyers.

“I’m just glad I got the recognition,” Vaughn said. “I helped start the brand from my living room in Venice and watched it explode.”

This story first appeared in the October 15, 2004 issue of WWD. Subscribe Today.